The cat hustlers
Fabio lives in one of those giant DT Toronto slabs. “Saw this ad in my condo web forum,” he says. “Note the reference to remote work.”
Here’s the post:
“Cat sitting available on weekdays and weekends, dog walking (or sitting in your home) available! We’re John & Mary, owners in the North Tower and happy to help look after your pets while you’re out living life Remote work means we can pop in to show your pets some love most hours of the day. We have a cat of our own and many family dogs, and would love to make some more furry friends in the neighbourhood. Email if you’re interested for convenient and reliable pet care.”
Having a side hustle is admirable, of course. And these days folks need all the extra income they can get. Especially if it’s for cash, unreported and evades tax. Oh yeah, and also when you can make bank while having a full-time gig at the same time. Yup, it’s a WFH world, as employers rely on worker honesty, dedication, loyalty and self-discipline. Unfortunately in this case (it seems) workday time spent with “more furry friends” may hint why Canada has a productivity problem.
In fact, it’s more than that. We’ve got a wage problem, too, says the Bank of Canada. People are being paid more and more for, ahem, doing less and less. Catsitting aside.
Our central bankers warn unless we are all more productive (becoming a deeper issue as the population surpasses 41 million) wage growth of 5% a year is unsustainable. If it continues, inflation will be stoked by incomes. The interest rate reductions will stop. Mortgage prices will grind into a narrow range.
You likely don’t want to hear this, but tough. We’re told the country has a ‘productivity emergency’ and our output has declined for six of the last seven quarters. Meanwhile that surplus of available jobs we yakked about a year ago has apparently dried up. Job vacancies are down about 4% to the lowest level since before the pandemic. There are 335,000 fewer available jobs. And the unemployment rate has jumped 1% (because new hires are not keeping pace with the expanding workforce).
But at the same time we’re producing less, working less, commuting less and finding more time to stroke cats, people are demanding increased amounts of money.
The averge hourly pay for vacant positions was over $27 in the first three months of this year – a huge 7.3% jump annually (that’s 4.5% higher than the rate of inflation). StatsCan tells us the outsized increase is influenced by more higher-valued-added positions being filled. After adjusting for that, the average jump is just shy of 5%. That’s exactly what multiple payroll surveys show.
And this is the problem. Compensation can’t continue to rise without leaning hard on the CPI.
So what’s at the root of things?
Yes, population growth explains the jobless rate ticking higher. A cooling economy explains why those job vacancy numbers are shrinking. WFH and the deteriorating employment ethic it has brought helps explain productivity. And it looks like real estate explains the wage curve.
The amount of personal capital going into housing is immense. Also gorillaesque is the growing pile of mortgage debt Canadians carry – well over $2 trillion and equal to the entire Canadian economy in size. That steamy heap continues to grow – last year by more than double the rate of GDP growth. And now we have about $220 billion of that debt coming up for renewal, going from an average of 2.89% to something north of 5%.
Average house prices have not budged much despite ten rate hikes and one reduction. Mortgage rates are still double levels of three years ago and sales are down, but no collapse in valuations. The cult of housing continues. Most Canadians think of this as the only achievable way to build wealth. They’re suspicious of equity markets. They are unschooled in personal finance. They believe – supported by pandering politicians – that owning a home is a right, and that real estate will always go up.
Thus, while millions of Americans stuff billions worth of stocks into the 401ks, feeding corporations that innovate, expand and hire, we throw everything into down payments on homes that take a quarter-century to pay off. The banks do great. Advances in technology and equipment – not so much.
So what next?
TD came out with a new forecast this week. Not so gloomy. But not peachy, either. The economy is “soft but not facing a cliff.” Growth will be meh, and consumer is expected to cool. The reasons are threefold. Interest rates will not be coming down fast enough to take pressure off debt payments and free up disposable income. Immigration levels will be chopped, removing demand. And the labour market will stall, resulting in net job losses. (the jobless rate will hit 6.7% by year-end, the bank predicts.) Meanwhile, those mortgage renewals will be “squeezing” homeowners, sucking off a growing chunk of income.
Draw your own conclusions. But we may be on the wrong path.
About the picture: “Meet Jasper and Boo, our adopted sibling purr machines,” writes James, in Edmonton. “Reading you over the years has helped us make choices to simplify and secure our financial lives; thank you.”
To be in touch or send a picture of your beast, email to ‘[email protected]’.
Source: https://www.greaterfool.ca/2024/06/20/the-cat-hustlers/
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